ASX 200 tech shares under pressure after Nasdaq selloff

The Nasdaq experienced a 1.8% selloff on Tuesday. This appears to be spelling trouble for ASX 200 tech shares like Afterpay (ASX: APT).

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The Nasdaq found itself in deep waters on Tuesday as steep declines in mega cap shares pushed the index as much as 3% lower.

Bouncing off intraday lows, the index managed to close 1.88% down for the day. However, the negative sentiment has carried over to ASX 200 tech shares today. 

Why ASX 200 tech shares are coming under pressure 

High profile United States tech companies including Facebook Inc (NASDAQ: FB)Apple Inc (NASDAQ: AAPL)Amazon.com Inc (NASDAQ: AMZN), and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) all fell between 1.3% to 3.5%. 

Another US-listed tech stock to note is Affirm Holdings Inc (NASDAQ: AFRM) which dived 6.9% lower. The Affirm share price has shed 16% in value in this week alone to set a new all-time record low.

Conversely, cyclical and defensive sectors such as banks, consumer staples, and real estate outperformed and finished near positive territory, helping the Dow Jones Industrial Average Index (DJX: .DJI) to close 0.06% higher. 

This seems to be spelling bad news for the likes of ASX 200 tech shares like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) as well as fellow buy now, pay later stablemate Sezzle Inc (ASX: SZL).

At the time of writing, the Afterpay share price is trading 2.88% lower at $107.38. Zip shares are also down 2.74%, trading at $7.45. Meanwhile, the Sezzle share price has fallen a painful 4.33% to $8.61.   

Why are tech shares selling off? 

Today’s selloff arguably continues to reinforce the recent rotation out of tech-related sectors, and back into cyclical sectors and value shares. Many stocks that outperformed during the pandemic are suddenly on the back foot as the real economy continues to recover. 

A recent example of this can be seen in the selloff of ASX e-commerce shares such as Kogan.com Ltd (ASX: KGN) and Redbubble Ltd (ASX: RBL).

Why it’s not all doom and gloom 

Despite the weakness in tech, the ASX 200 is heavily weighted towards financials. The US financials sector managed to close 0.7% higher while other notable sectors such as materials and industrials closed a respective 1.04% and 0.41% higher. At the time of writing, three of the big four ASX 200 banks are trading in the green.

If the ASX 200 were to follow in the footsteps of the US market today, the selling pressure could continue to be concentrated in tech and growth-related sectors. 

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Facebook. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc and recommends the following options: long January 2022 $1920 calls on Amazon, short March 2023 $130 calls on Apple, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, Kogan.com ltd, and Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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